The Nigerian Senate has urged the Federal Government to cease providing tax waivers and concessions to corporate organizations, expressing concerns over substantial revenue losses attributed to these incentives.
The call comes on the back of efforts by the federal government to mitigate dwindling revenue generation.
The Senate Committee on Appropriations proposed an alternative approach during an interactive session on the 2024 budget with Wale Edun, Minister of Finance, and Atiku Bagudu, Minister of Budget and Economic Planning.
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The committee, chaired by Adeola Olamilekan, underscored the need for companies to fulfill their tax obligations entirely and suggested that they pay their taxes upfront, with the option to apply for rebates if deemed necessary.
During the session on Wednesday, concerns were raised about the abuse of economic policies, leading to significant revenue loss. Minister Wale Edun informed the panel that Nigeria had lost approximately N3 trillion to tax waivers this year alone.
In response to these concerns, Senator Mohammed Sani Musa proposed adopting a system similar to withholding taxes for tax waivers, suggesting that companies must prove tax compliance before receiving rebates.
Ali Ndume echoed the sentiment, urging the government to follow the bold decision on fuel subsidies and put an end to tax credits and waivers. He emphasized the importance of addressing revenue collection loopholes that benefit a few at the nation’s expense.
Committee Chairman Adeola Olamilekan proposed a transitional approach by reducing the provision for waivers by 50 percent. Edun assured the committee that the federal government’s fiscal policy and tax reform committee would carefully consider the lawmakers’ advice.
While appreciating the need for reform, Edun stressed the importance of practicality in implementing such policies, acknowledging that the details require careful consideration. He highlighted the agreement to move towards a rebate system rather than the upfront granting of waivers and incentives, including interest incentives.
“In trying to implement such a laudable policy, it is important to look at the practicality and decide how it can be done, whether it can be done in one fell swoop, or whether there are some obvious exceptions. But I think we are all agreeing that we should try as much as possible to move to a rebate system rather than upfront granting of waivers and other incentives, even including interest incentives.
“The fiscal policy and tax reform committee is very careful about that, and what you have advised today will be taken as important input into our work,” said Edun.
The Senate’s call for the discontinuation of tax waivers and concessions reflects a broader effort to enhance revenue collection and address fiscal challenges, aligning with the government’s commitment to expanding tax nets as part of President Bola Tinubu’s tax reforms.
However, should the call be heeded, it would present a new hurdle considering that the government has relied on tax waivers as a tool to incentivize businesses, particularly during a period when the nation’s economy is facing a downturn.